The United States commodities regulator has paid $16 million this year to whistleblowers who gave information leading to successful enforcement actions, with the majority of the tips involving crypto.
In an Oct. 31 statement, Commodity Futures Trading Commission Commissioner Christy Goldsmith Romero said most of the tips received this year involved crypto, which she claimed was “an area that continues to have pervasive fraud and other illegality.”
Very proud of these offices and their outsized results. As a former IG, I know firsthand how important whistleblowers
— Commissioner Christy Goldsmith Romero (@CFTCcgr) October 31, 2023
are. The CFTC could not fully protect customers and markets w/o them. Click to read about the highest # of tips, crypto tips & environmental fraud tips. https://t.co/C4I9tgnxRU
Two whistleblowers received $15 million alone for their information, which led the CFTC to successful enforcement cases in September; however, the regulator didn’t delve into the nature of those cases in its statement at the time.
Romero said whistleblowers are vital to mitigating commodities fraud and that the CFTC wouldn’t be able to “fully protect” customers and markets without them:
“Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time. The faster we can stop fraud, the more we can protect customers from harm.”
Romero acknowledged the efforts of CFTC’s Office of Customer Education and Outreach, which teaches people to spot, avoid and report cryptocurrency fraud.
“With the rise of crypto, more retail customers have come under the CFTC’s jurisdiction,” Romero said.
Related: CFTC issues $54M default judgment against trader in crypto fraud scheme
The CFTC has doled out almost $350 million since the program started in 2014. It’s led to over $3 billion in enforcement sanctions ordered in cases tipped off by whistleblowers.
The CFTC won a record $3.4-billion penalty payment in a Bitcoin (BTC)-related fraud case in April and won its case against Digitex CEO Adam Todd in July, who was ordered to pay $16 million in penalties.
In April, Romero iterated that managing the risks associated with cryptocurrency would be crucial to upholding market integrity, national security and financial stability.
She’s advocated integrating stronger identity verification measures, saying it would minimize illicit finance in the cryptocurrency market.
As the bear market deepens, more crypto companies will have to lay off employees to keep the lights on.
— Jake Chervinsky (@jchervinsky) December 29, 2018
This creates a new risk: disgruntled former employees often become whistleblowers, especially if they have valuable intel that entitles them to an SEC or CFTC bounty reward.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
